Recent data shows US job growth over the past year was notably weaker than initially estimated. According to new information released Wednesday, there were 818,000 fewer jobs in March 2024 than originally reported.

The Bureau of Labor Statistics (BLS) performs an annual review of employment data, aligning monthly payroll survey figures with those from the Quarterly Census of Employment and Wages (QCEW). This preliminary revision is the largest downward adjustment since 2009, suggesting the labor market was not as robust as previously thought, though job growth remains historically strong.

The revised average monthly job gain from April 2023 to March 2024 is 173,500, down from nearly 242,000 previously estimated.

Despite recent stock market declines, the US economy is still relatively strong, and there's optimism about avoiding a recession. Chris Rupkey, chief economist at FwdBonds, emphasized that the revised job figures reflect adjustments rather than actual job losses. He noted that strong consumer spending fueled significant economic growth in the latter half of last year.

The revisions mainly affect the private sector, with significant reductions in professional and business services (down 358,000 jobs, or 1.6%), information (down 68,000, or 2.3%), leisure and hospitality (down 150,000, or 0.9%), and manufacturing (down 115,000, or 0.9%).

These preliminary figures, which were delayed by over half an hour, will be finalized in February 2025. They provide a critical update on the labor market's health, indicating a greater-than-expected slowdown in job growth, which could influence the Federal Reserve's decisions on interest rates.

Fed Chair Jerome Powell is set to speak at the Kansas City Fed’s economic symposium in Jackson Hole, Wyoming, on Friday. Analysts expect the revisions may pressure the Fed to adjust its monetary policy.

Michael Block, co-founder and chief strategy officer at AgentSmyth, suggested the revisions might prompt the Fed to consider more explicit commitments to interest rate cuts.

Understanding the Revisions

Economists had anticipated some revisions due to the more accurate QCEW data, which shows a slower job growth pace compared to the monthly surveys. The large size of the revision, however, was surprising to some, attributed to the BLS's method for accounting for new and closing businesses.

Torsten Slok, chief economist at Apollo Global Management, described the issue as a "counting problem" rather than a serious economic concern. He noted that the slight discrepancy in job numbers does not significantly impact the broader economic outlook.

Economists also caution that the preliminary nature of the data means further changes could occur. The QCEW may not fully capture undocumented workers but reflects the impact of recent immigration surges.

The upcoming August employment report will be crucial for assessing the current job market, with the latest data indicating solid labor market fundamentals despite recent slowdowns.

Why Data is Revised

Economic data often undergoes revisions as more comprehensive information becomes available. The BLS uses two surveys to measure employment: one for households, providing unemployment data, and one for businesses, which estimates job changes. These monthly estimates are initially based on incomplete data and are revised twice in subsequent reports.

Annual benchmark revisions replace sample-based estimates with more accurate QCEW data, which is derived from quarterly tax reports submitted by businesses. The latest QCEW data, released Wednesday, showed national employment at 153.6 million in March 2024, a 1.3% increase over the past year.